The Coming Energy Wars

June 21, 2008
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Average gas prices in the United States have reached $4 per gallon, and America‘s notoriously profligate ways started to change fast. Americans are driving less, using mass transit more, buying fewer big cars, and shopping with less abandon.

There are more changes to come.

Oil prices climbed from $10 per barrel in 1999 to $95 in 2007, and have continued to climb. Many are realizing that long-term demand, led by China and India, is only going to grow, and that the supply threats such as falling investment, industry bottlenecks and downward estimates of big field reserves aren‘t going away any time soon.

The $200 per barrel barrier could be passed within the next two years -- and as soon as the next six months.

Skyrocketing oil prices are already causing real pain for ordinary people and threatening global economic growth. The price pressure is now particularly acute in big emerging markets like China and India. Americans now making up for their losses at the gas pump by flocking to Wal-Mart for cheap Chinese goods may soon be out of luck.

If oil reaches $200 a barrel in 2009, it would be a painful shock, not just a tax on gas-guzzlers. No industry will be unaffected.

There is also increasing concern that as higher oil prices force many Asian economies to reduce or even cut their generous fuel subsidies, growth will slow sharply, and there could be social unrest as the world‘s poorest become more desperate. As areas like the Mideast and Africa, Russia and Venezuela continue to rise, there will likely be increasing energy greed, aggressive behaviors and neocolonial actions.

Blood will almost certainly be spilled.
The United States and the rest of the world would seem to be addicted to oil. And it has taken gasoline prices going over $4 a gallon to get most Americans to even begin to change their frequently-wasteful ways.

The United States alone goes through close to 21 million barrels of oil a day, and imports about 10 million.

Of course, the gas we use to drive our cars is only a fraction of what we use oil for. A bigger issue is the fuel used to transport goods across the world, a luxury that is quickly becoming not economically feasible. Not to mention that oil is used to manufacture plastics, which are part of everything from polyester clothing to food packaging and electronics.

So as oil prices continue to climb -- and perhaps even reach the once unthinkable $200 a barrel -- every industry will feel the effects.

In many developing countries, these rising fuel prices are contributing to food shortages, and even in the United States, many families are giving up meat and other pricey foods so they can buy fuel.

Why are Oil Prices so High?

Because they can be. I recently talked to an expert in this area and he and many other experts believe that as much as 60% of the price of oil is based on pure speculation from investors bidding up oil futures prices.

Oil companies are notoriously greedy, and the oil companies -- not the people who are selling the oil to you -- have record profits. Even back in 2005, when Hurricane Katrina destroyed much of the oil industry's infrastructure in the Gulf Coast, ExxonMobil flourished.

Exxon's revenue went up 32 percent that year to over $100 billion, which is greater than the annual GDP of all but 38 countries.

It goes without saying that as prices rise, demand continues, and supply threats surface, the world is in for some serious unrest in coming years.

On a large scale, obviously something drastic needs to take place to replace the world’s dependence on oil -- and hydrogen, produced from tap water, will almost assuredly play a role.

The Hydrogen Economy

“The Hydrogen Economy” is the term used to mark the shift from fossil fuels such as coal, oil, and gas to hydrogen. The idea is that hydrogen will become an unlimited -- and clean -- fuel source.

Writes Darshan Goswami, M.S., P.E.:

“Hydrogen is a renewable, versatile, simple sustainable domestic energy” and there is no danger of running out of hydrogen because it is the most abundant element in the universe. Hydrogen can be produced through a thermal, electrolytic, or photolytic process from fossil fuels, biomass, or water. Renewable and nuclear systems can produce hydrogen from water using a thermal or electrolytic process. People can even produce it in their homes with relatively simple apparatus.”

“The Hydrogen Economy would open the doors for fundamental changes in our economic, political, and social institutions, similar to the impact of steam power at the beginning of the “Industrial Age,” Goswami says.

Already, giant oil companies are investing in a hydrogen-based future, and fuel companies like Shell, BP and Texaco are already forming hydrogen divisions.

So switching over from gasoline to hydrogen power is something that could happen soon, even within the next two decades.

Plans for a “hydrogen highway” that will stretch from Vancouver to Baja, California are already underway.

And “by 2016, half of all new cars sold could be hydrogen-powered, over 50 percent of the nation's gas stations could also pump hydrogen, and the U.S. could get more than half its energy from domestic sources, putting energy independence well within our reach,” writes Goswami.

What Can be Done on a Local Level?

On a small scale, the changes are already occurring. You can reduce your own need for oil by carpooling to work, turning off your lights and keeping your air conditioner use to a minimum. You can also bypass the rising food transportation costs by buying mostly locally grown food and even planting some of your own.

For the times when you do have to drive, you can actually increase your gas mileage by 37 percent just by braking easier and slowing down. Some people are even taking fuel economy to a whole new level simply by skillfully changing the way they drive.

This group, known as hypermilers, use tips like coasting to stop lights, using cruise control, and avoiding full stops as much as possible to save gas … and some of them boast getting up to 90 mpg!

If you have the resources and desire, you can also look into making your home or office building more energy efficient by harnessing the power of the sun.

There is enough energy in the sunshine that falls on the earth in one hour to satisfy the energy needs of the entire human race for ONE YEAR.

My new office building, constructed for my practice and Web team, will have solar power. It seems obvious to me that this technology will allow us to not only radically lower our utility bills, but do it without polluting our environment.